CTA Case No. 5976 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY NEW SKIN CORPORATION, Petitioner, - versus- C.T.A . CASE NO. 5976 NELSON TAN in his Official Prom ulgated: Capacity as Commissioner of the Bureau of Customs JUL 06 2001 'f.fu:r"'7f? Respondent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - X DECISION This is an appeal from the reso lution of then Commissioner of Customs Nelso n Tan dated December 8, 1999 reversing the decision of the Acting District Collector o!' C ustoms Felicitacion R. Geluz dated September 30, 1999 and decreeing the forfeiture of the subject shipm ent in favor of the government. The antecedent facts follow. On April 4, 1999, fourteen ( 14) packages (shipment, for brevity) arrived in the Philippines on board the vessel APL China V.34 covered by Bi ll of Lad in r- l\ l . LA99939MNLA, LA99939MNLB and LA99939M1'~LC and dech ~ J .mder th e following entries: a. Informal Import Declaration and Entry No. 18572 in the nJme of Leslie F. Ocol 4 pkgs. STC. Exercise Equipment for Personal Use. b. Informal Import Declaration and Entry No . 17790 in the name of Celia T . Villarin 4 pkgs. STC. Exercise Equipment for Personal Use. 799

DECISION- CTA CASE NO. 5976 PAGE 2 c. Import Entry and Internal Revenue Declaration No. 40589 in the name of Edisa V. Serranilla 6 pkgs Exercise Equipment for Personal Use. On April 22, 1999, Informal Entry Division (lED) Examiner Paz Lubas recommended to the District Co llector of the Manila International Container Port (MICP) the issuance of a Warrant of Seizure and Detention (WSD) against the shipment consigned to Leslie F. Ocol and Ce li a T. Yillarin for lack of SGS Clean Report of Find ings (CRF) and for violation of Section 2503 of the Tariff and Customs Code of the Philippines (TCCP), in relation to Section 2530 (f) and (I) (3, 4 & 5) of the TCCP, as amended (p. 39, Customs Records), it appearing that the shipment was grossly undervalued and was declared as exercise equipment for perso nal use when it was found to be of commercial quantity. As a result thereof, WSD Seizure Identification (SI) No. 99-080 was filed against the said shipment on May 4, 1999 (p. 40, Customs Records) . On May 10, 1999, Customs Examiner Jocelyn C. Obsum reported to the District Collector of Customs, MICP, that the shipment consigned to Ms. Edisa V. Serranilla was misdeclared and undervalued (p. 58, Customs Records). l-Ienee, WSD Sl No. 99-083 was like wise filed against the shipment on May II, 1999 (p. 12, C usto ms R~..:cords). Thus, on June 29, 1999, the above consignccs olkrcd to redeem thc , � �. mcnt and executed for the purpose, a Joint Affidavit stating therein that th ~.., c was an error in the issuance of the WSD against their shipment because apparently, the warrants issued against them were for a total of 20 packages of exercise equipment when it should on ly be 14 (pp. 59-60, Customs Records) . 800 L

( DEC IS ION- CTA CASE NO. 5976 PAGE 3 On August 3 1, 1999, w hile th e offer to redeem was und er considera ti o n, Petitioner, through counsel, fil ed a M oti on to Intervene, cla iming th at it is the real owner of the shipment s ubj ect matter of th e se izure proceedings (p. 69. C ustoms Record s). In s upport th ereof, Petitioner attached to the said moti on its SEC Regis trati on Certi ficate under the Fore ign Investm ents Act of 199 1, its Subic Bay Me tropo litan A uthori ty (S BMA) Certificate of Registration and Tax Exe mptio n No . 95-00 II dated March 16, 1999, its Me morandum of Agreement w ith Behav io r Mod ificatio n Incorporated (do ing business und er the name BM I Slimmers World Intern ati ona l) unde r whic h the latter und ertook to prov ide Pe titioner the needed services re lati ve to its purchases/im po rtation of its capi tal equipment/raw materi a ls and the ir subsequent re lease fro m the B ureau of C ustoms, the pertinent Purchase O rder, Invo ice and Bill o f Ladin g covering th e subj ect shipment and the wire transfer evidencin g payment of th e shi pment. On September 14, 1999, the Motion to Intervene was granted and Petitioner was included as C laimant- Interve nor in S I Nos. 99-080 and 99-083. O n Septe mber 30, 1999, Actin g Di strict Co llector of C ustoms Felicitac ion R . Ge luz rendered its decision in Seizure Identificati on Nos. 99-080 and 99-083, li ft ing W SD Nos. 99-080 and 99-83 and orderin g the transshipment of the subj ect eq uip ment to herein Petiti oner at Subic Bay Freeport Zone as ori gina ll y intended (p p. 160-1 64, C ustoms Record s), after takin g into acco unt the fo ll owing co nsideratio ns: I. T he subj ect shi pment is consigned to New Skin Corporation and th e bill o f ladin gs and in vo ices prese nted by Edisa V. Seranilla and Ce li a T . V ill ari n are fic ti tious w hile the co mme rc ia l in vo ice presented by New Skin Corpora ti on, refl ecting the tru e va lue of the ship ment arc a uth enti c and ge m u n e; l

( DECIS ION- CTA CASE NO. 5976 PAGE4 2. Ms. Leslie Ocol repudiated her being a consignee; 3. The Memorandum of Agreement entered into by and between Petitioner and Behavior Modification, Inc.; and 4. Non-appearance of Edisa V. Seranill a and Celia T. Villarin during the scheduled hearings. When the said decision was elevated to the App?llatc Division of the Bureau of Customs, its Acting Chief James F. Enriquez, together with Atty. Gallant D. Soriano, Director III of the Legal Service and Emma M. Rosqucta, Deputy Commissioner, concurred with the decision of the District Collector (pp. 157-159, Customs Records) and recommended its approval to the Commissioner. However, on December 8, 1999, the then Commissioner of Customs Nelson Tan issued a resolution reversing the decision of the District Co llector elated September 30, 1999 and ordered the forfeiture of the shipment in favor of the government to be disposed of in accordance with law. Hence, the case before Us. In his Answer filed on March I, 2000, Respondent claimed, among others, that: "21. Upon review of the records, it was noted that the subject shipment was declared as exercise equipment for personal usc, with a declared value of $480.00/consignee. However, the customs examiner and the spot-checker found the said shipment to be in commercial quantity and with a value of $52,080.00, thus making the shipment gross ly undervalued . 22. Said undervaluation is beyond the mm1mum threshold limit se t forth by law. Thus, the subject shipment shall ipso facto be forfeited in favor of the Government to be disposed of pursuant to law. Sec. 2503 of the TCCP, as amended, reads: "SEC. 2503 . Undervaluation, Misc/assification allll Misdec/aration in Ent1y. - When the dutiable value of the imported articles shall be so declared and entered that the duties, 80 2

I DECISION- CTA CASE NO. 5976 1'/\GE 5 based on the dec larati on of the importer on the face ofthe entry, wou ld be less by ten percent (10%) than should be lega ll y co llected, or when the imported articles shall be so described and entered th :1t the duties hased 011 thL' illlpmtn' s tksniptio11 on the 1;1cc ol" the e11try would he less hy perce nt (si c)( IO'Yc,) th :111 should he lcgall 'f co ll ected based Oil the t:1rill ci :ISS ili C:Itioll, ol" whe1 1 the dutiable \Vl'i)�.hl, llll':I SIII"l'lll l'l il ()J" ljll:llllil _y o!' i111pm1L'd :11ti rk :> i:; lolllllliipull , �~: llllill : llitlll lu ,�;-..n�n ll1 y It'll l'l 'l\ '('111 ( lll"u) lll 111\lll' ll li lll 1111 � l"llll"ll"d 1\'l'l)'. lil , llll'l l:illll'llll'lll 111 ljlliiiiiii _Y, 11 :; lli l ll ;ll) '.'" : ; l~;dl lw culkL"Il'll 1111111 IilL' ill'illli IL"I i11 ;111 :JIIIlllllll 11J" IIlli k :;;; th:111 tilL' dilfcre11cc hl'l wcc 11 the l"ull dul y :111d the estimated duty based upon the declaration o l' the importer, nor more than twice of such diflcrcncc: Pro vided, That an undervaluation, mi sdcclaration in weight, measurement or quantity of more than thirty percent (30%) between the value, weight, meas urement. or quantity declared in the entry, and the actual value, we ight, quantity, or meas urement shall constitute a prima fac ie evidence of fraud penali zed under Section 2530 . of thi s Code: Provided, further, That any misdechued ot� undeclared imported at�ticle/items found upon examination shall ipso facto be forfeited in favor of the Government to be disposed of pursuant to the JWovisions of this Code . 23. The forego ing undervaluation and misdcclaration shall likewi se constitute a prima facie evidence of fraud penalized under Section 2530 of the TCCP, as amended, which provides that: "S EC. 2530. Property Subject to FOJfeiture Under Tariff and Customs Law. - Any vehicle, vessel or aircra ft , cargo, article and other obj ects shall , under the followin g conditions be subj ected to forfeiture: XXX XXX XXX f. Any article the importati on of whi ch is effected or attempted contrary to law, or any article of prohibited importati on or exportation, and 80 3 .)

DEC IS ION- CT/\ Ci\SE NO. 5976 1'/\GE 6 a ll other arti c les whi c h, in the o ptm on o r the Co ll ector, ha ve bee n used , a rc or we re ente red to be used as instruments in th e importati on or ex portati on of the forme r. XXX XXX XXX l. A ny arti c le so ught to be im ported or exported : (3) O n the strength of a false declarati on or a ffid av it executed by th e owne r, importer, ex porter or co nsignee co ncern ing th e impo rtatio n of such arti c le; (4) On the strength of a false invo ice o r other doc um ent executed by the owner, importer, ex porte r or co nsignee co ncernin g the im portati on o r expo rtati o n of such arti cle; and (5) Through any oth er prac ti ce or device contrary to law b: ' means of w hi ch s uch arti c les was e ntered through a customho use to the prej ud ice of the gove rnm ent. 24. T herefo re, the Commi ss ioner o f C ustoms co rrec tl y ac ted o n the s ubj ect shipment. 25. C learly, petitiO ner has no ca use of ac ti on aga inst the Commi ssioner of Customs. 26. Besides, the instant petiti on is fa ta ll y defecti ve, being verifi ed by co unsel for Petiti oner and not the Pe titi one r itself thro ugh any o f its offic ers (Far Eastern Shippin g Co. vs. C A, G.R. No. 130068, and Manila Pilots Association vs. Philippine Ports Authority, G.R. No. 130150, prom. Oct. 1, 1998)." The so le iss ue to be reso lved by thi s Co urt has been agreed upon by the parti es in their Jo int M anifestati on fil ed on Jul y 28, 2000 : Whether or not th e ac ts o f Mesda mes 80 4

f DEC ISION- CTA CASE NO. 5976 PAGE 7 Edi sa Seranill a, Leslie Oco l and Celi a T. Yil larin arc l-"1i nd ing on the subj ect shipments and on the real co nsignee to warrant the forfC iture of the same. We rule in the negative. Article 188 1 of the Civ il Code of the Philippines provides: " T!te agent must act wit/tin tlze scope of !tis aut!tority. He may do suclt acts as may be conducive to lite accomplislzment oft!te fJIIIJJOse oftlte agency." Consequentl y, the principal cannot be bo und in case the agent acts in excess of his authority. In the Me morandum of Agreement entered in to by and between Petitioner and Behav ior Modifi cation, Inc. (BM l), the latter was given the autho rity to secure the release of Petiti oner's importation and engage th e se rvices of a Custo ms broker fo r such purpose (p.78, Customs Records). While there we re no specific instructi ons given to BMI in the executi on of the agency, thi s Court find s that the unl awfu l acts of the broker engaged by BMI in obtaining bills of lading in their own names and of gross ly underva luing the subj ect shipment cannot be co nsidered to be conducive to the accompli shment of the purpose of the agency and may not be imputed against herein Petiti oner in the absence of ev idence to support the charge. The Purchase Order dated February 12, 1999 (p. 48, Customs Records), the invo ice dated March 2, 1999 (p. 49, Customs Records) and the wire transfer ev idencing pay ment of the shi pment to its supp lier, all of which reflected the true value of the shipment, ind icate the lack of inte ntion on the part of Petiti oner as well as BMI to defraud the government. To fo rfe it. therefore, the shipment of Petiti oner in view of the fraud perpetrated by its broker would be unfa ir. The letter of th e broker, Fame Cargo International, to Slimmcrs World da ted Jul y 27, 1999 requesting the latter to give them more time to release the shipment fo r whi ch reaso n they issued a check dated 805

v LJLCIS ION- CTA CA SE NO. 5976 PAGE 8 August 19, 1999 in the amount o r P411 ,090.52 until the cargo is re leased , rurth er bo lsters our co nclusion that Petiti oner and BMI had nothin g to do wi th the mi sdeclarati on and und ervaluati o n co mmitted by Edi sa Seranill a. Records show that the name of Les li e Oco l appearin g in the Informa l Import Declarati on and Entry No. 18572 was mere ly used by the broker to carry out the ir unl awful ac ts considerin g that Lesli e Oco l hersel f deni ed parti cipati on in the Jo int Affidav it exec uted by the s upposed three "co ns ignees" for the purpose o f redeemin g th e shi pment. We a lso noted the d iffere nce in the signature of Leslie Oco l appearin g in th e said affid av it (pages 2 1 to 22, CTA Reco rd s) as co mpared to he r ge nuine signatures in the Purchase O rde r (p. 48, CTA Reco rds) and her Me mo to ING (p. 75, C ustoms Record s). It is also wo rth y to note that und er Secti on 2530 (I) of the TCCP, any article so ught to be imported or ex ported shall be s ubj ected to forfe iture in case of a fa lse decl a rati on/ a ffid av it or th e fa lse in voice/othe r doc um en t executed by th e owner, importer, ex po rter or consignee. Edi sa Seranill a and Celia V ill ar in arc ne ither th e importe rs/consignees nor the owners o f th e shipment. S ince Petiti oner is the co nsignee o f th e exercise equipment (p. 87, CTA Record s, Joint Ma ni fes tati on), it fo ll ows that the sa me cannot be fo rfe ited on th e strength o r a fa lse dec larati on it d id not make . Finall y, th e lack of SGS C lea n Repo rt of Findings was ampl y ex pla ined by the fac t th at Petitioner is dul y registered w ith th e SBMA and is exempted fro m inspecti on by th e Soc iete Gene ra le de Surveill ance und er A rti cle IV o f the Certifi cate of Registrati on and Tax Exempti on No. 95-0011. 806

DEC ISION- CTA CASE NO. 5976 PAGE 9 WHEREFORE , in view of a ll the fo rego in g, the Co urt fi nds the instant petiti on meritorio us and in acco rd ance with law. Acco rd ing ly, the reso luti on o f the then Commi ssioner of C ustoms Ne lso n Ta n dated December S, 1999 is hereby REV ERS ED and the deci sion of th e Ac tin g Distri ct Co ll ector of C ustoms, Fe!icitac ion R. Geluz, dated Septembe r 30, 1999 in SI Nos. 99-080 and 99-083 is her( by UPH ELD . SO ORDERED. ~(9- c�~ ERNESTO D. ACOSTA Presidi ng Ju dge I CONCUR: MANCJOQ. ;~ Associate Jud ge CERTIFICATION I hereby certify th at th e above dec ision was reac hed after due co ns ul ta ti on w ith th e members of the Co urt of Tax Ap peals in accorda nce wi th Sectio n 13, Artic le Vlll of th e Co ns tituti o n. L~ - C~ ERNESTO D. ACOSTA Presid ing Judge ' 8 u'I